2G sale flops, re-auction of spectrum likely

The government’s plan to raise Rs 45,000 crore through 2G spectrum auction virtually flopped on Wednesday with the government calling it off on the second day itself as it received bids worth only Rs 9,407 crore.

The government is likely to call for fresh bids at a sharply lower reserve price. “There will be an auction of unsold spectrum,” said a telecom ministry official. “We may consider lowering the reserve price in circles where there were no bids. We will try to complete it within this financial year.”

Only 55% of the total spectrum offered was sold, with operators refusing to pick up any slot in the most lucrative Delhi and Mumbai circles. The two metros account for 40% of the total spectrum in terms of value.

There were also no bidders for Karnataka and Rajasthan — a far cry from the 3G spectrum auction two years ago when companies were jostling against each other in a 35-day process that fetched Rs 67,000 crore.

The auction — following the Supreme Court decision to strike down the 2008 allocations on a first-come-first-served basis as “unconstitutional” — was based on the reserve price that was fixed supposing that the companies would bid for the entire spectrum put on the block.

India’s national auditor CAG, estimated in a report tabled in 2010 that the government might have lost potential revenues of Rs 1.76 lakh crore by offering spectrum to companies in 2008 at lower prices. But communications and IT minister Kapil Sibal said, obliquely questioning the CAG’s methodology of estimating revenue losses: “It is dangerous to look at the situation in 2010 and relate it to 2008.”